UPDATE-2: Erdogan –  Putin  summit:  Turkey to pay 25% of Russian gas bill in rubles

The update adds excerpts from a Moscow Times article covering the topic:

The Moscow Times:  Turkey to Pay for Quarter of Russian Gas in Rubles: Putin


Putin told Erdogan Friday that he viewed Turkey as a “reliable” trade partner and was ready to use it more as an export route for Russian goods.


“As you know, shortly our agreement should come into force on delivering Russian natural gas to Turkey, with 25 percent of the payments made in Russian rubles,” Putin said.


Turkey imports almost half of its gas and about a quarter of its oil from Russia.


The purchases are essential to keep Turkey’s manufacturing-driven economy growing in the runup to presidential and parliamentary polls due by next June.


Putin said Russian companies have “received signals they can export our products through Turkey. Turkey is a reliable partner in this regard and can ensure steady deliveries via its territory to the rest of the world”.


The boom in wartime trade between the two countries has raised growing alarm in Western capitals trying to impose sanctions on Russia for its invasion.


Both Washington and Brussels are piling pressure on Turkish companies to limit trade with Russia.


The US Treasury said this week it was placing Turkish banks processing transactions made through Russia’s Mir payments system under closer scrutiny.


Five Turkish banks are now processing Mir transactions.


Excerpt  only, visit link for full article



This is our first take on the critical Putin-Erdogan summit, from which Erdogan expected to return with promises of discounted natural gas. In Putin-Erdogan summits, the conversation is highly informal and personal. Hence there may be other agreements, which shall be revealed by Erdogan in his traditional home-flight interview with journalists, or his PR people.


Russian President Vladimir Putin says 25% of Russian gas supplies to Turkey will be paid for in rubles, after a 40 minute meeting with Erdogan. The deal falls somewhat short of what Erdogan had expected from Putin.  In addition, Turkish press source report that “Putin expressed hope that Russian companies can export from Turkey”, which could   breach extant sanctions on  Russian trade and financial transactions.


“Our agreement on deliveries of Russian natural gas to Turkey should come into effect in the near future, with 25% of payment for these deliveries in Russian rubles,” Putin said, speaking during a meeting with Turkish President Tayyip Erdogan on the sidelines of a Shanghai Cooperation Organisation summit in Uzbekistan.  Turkey’s natural-gas bill is set to exceed $50 billion this year, and Russia is its biggest energy supplier.


Turkey is expected to run a current-account deficit of $47 billion at the end of this year, and the lira’s poor performance is making it more costly to cover debt. Soaring global energy prices have added an additional burden.


Erdogan hopes to stabilize the  week exchange rate with discounted natural gas, as well as spare the constituency from  further utility price hikes in the winter.


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If there is  a gas-for-rubles deal its details are not disclosed,  meaning it is hard to guess, whether  it would provide economic benefits besides easing the burden on Central Bank.


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.